Build-up to big time

TNN|

Oct 26, 2006, 12.28 AM IST

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HDFC’s first half numbers in ‘07 point to continued strong growth in retail home loans. Disbursements grew by about 25%, despite higher interest rates.

Much of the growth has come in the second quarter itself. Approvals and disbursements were up by a record 45% and 60% sequentially during the September ‘06 quarter. Overall spreads have been maintained at 5% as yield increases were matched by higher funding costs. Profits, too, were in line at 22% for the first half of ‘07.

However, HDFC has banked on its investment portfolio for generating profits in the first half. Profit growth, adjusted for profit on sale of investments, has been flat at around 6% due to higher expenses and provisioning charges. Provisioning charges were up by almost 75%, resulting in a close to 20 bps fall in net NPAs to 1.31% from 1.52%. Expenses have increased due to higher other expenses and establishment factors.

Profit on sale of investments more than doubled to Rs 169 crore over the previous corresponding period, as HDFC booked gains taking advantage of rising markets. Portfolio gains have salvaged its bottomline growth. Fee income has headed lower, declining over the first half of ‘06. Within operating expenses, staff costs have been stable and depreciation also moved lower.

Though HDFC has gained on the volume front, these gains seem to have been offset by higher operating expenses and provisions.

Ravi Ananthanarayanan, Noemie Bisserbe, Johan Mundat and Krishna Kant

(This article was originally published in The Times of India)

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